17 Apr 2020
Posted in Coronavirus
COVID-19 presents insurers with an opportunity to rebuild consumer trust, says GlobalData
The majority of consumers around the world are using their cars much less, if at all, during the current lockdown. Therefore, it is expected that motor insurance claims for accidental damage to vehicles will decline by a third, according to GlobalData, a leading data and analytics company.
GlobalData’s 2019 UK Insurance Consumer Survey, reveals that accidental damage to an individual’s own vehicle accounted for 33.5% of all personal motor insurance claims in 2019. Damage to another person’s vehicle was the third most common reason for making a claim, representing 17.8% of the total.
Beatriz Benito, Senior Insurance Analyst at GlobalData comments: “The lockdowns imposed in many countries around the world has left a large proportion of the population housebound. Therefore, a reduction in claims presents insurers with an opportunity to give something back to customers and rebuild consumer trust. Currently, several insurers in the US are refunding policyholders as the lockdown will lead to a significant reduction in miles driven.”
The wider financial space has long suffered from consumer mistrust. In many instances, the personal experience of dealing with a provider does not match customer expectations. Transparency of price and terms and conditions are other areas causing customer dissatisfaction.
Benito adds: “Incumbent motor insurers in the US have allocated lump sums to refund policyholders, acknowledging that many customers are no longer using their vehicles to the same extent as in the past. Companies such as Allstate, Geico, Liberty Mutual and Safeco have all extended credits to customers.”
In the UK, the Association of British Insurers has pledged support for policyholders affected by the pandemic, while Spain’s MAPFRE intends to return premiums to its self-employed and SME policyholders.
Benito concludes: “In this respect, COVID-19 offers a good opportunity for insurers to improve customer confidence and trust – particularly at a time when inaction would effectively leave customers paying for a service rendered virtually redundant while the lockdown measures remain in place.”